2.2. Motive techno forces shaping evolution processes in ICT - Microprocessors - Photonics

A. Moore’s Law

Gordon E. Moore, 1965. "Cramming more components onto integrated circuits," Electronics, volume 38, number 8 (19 April), at http://www.intel.com/research/silicon/moorespaper.pdf

• Exponential increase in the number of components on a chip • Doubling of number of transistors on a chip every 18 months (1980s) • Doubling of microprocessor power every 18 months (1990s) • Computing power at fixed cost is doubling every 18 months (1990s)

Throughput of integrated circuits, in MIPS, will doubled every 18 months with cost of decrease by 50%, and this regularity will remain correct for several decades. (MIPS -millions of instructions per second)

• Reliability• Power consumption • Miniaturization (number of transistors per chip) • Terminal devices in the single chips

A. Moore‘s Law (Cntd)

108

107

106

105

1011

1010

103

104

109

199019801970 2000 2010

Tra

nsi

sto

rs p

er C

hip

Intel Motorola

DRAMs

Processors

64M

256M

1G

4G

16G

64G

1M4M

16M

64k256k

1k4k

16k

4004

808680286

80386

i486 PentiumPentium Pro

PPC 620Pentium IIPentium III

Sou

rce

: S

iem

en

s IC

N

6 days music

4 h video

2.000.000 pages

1947: 1000 MW

Pentium IV

2020

1012

We can store and process all information.

30 min. music

256G1T

McKinleyItanium (Merced)

A. Moore‘s Law (Cntd)

•1988 - 275,000 transistors on the Intel 80386 chips in to •1992 - 1.4 million transistors on the 80486 SL chipsPentium, Pentium Pro and Pentium II processor families•1999 - 28 million transistors (Intel Pentium III Xeon and Mobile Pentium III processors)•2001 - 42 million transistors (Pentium 4)

Evolution of Computer Power/Cost Brainpower Equivalent (computing power of the human brain) per $ 1000 (around 2030)

1900 1920 1940 1960 1980 2000 2020

Year1

Bio

1

Mio

1

1000

1

1000

MIPS per $1000 (1997 Dollars)

Monroe Calculator

IBM Tabulator

Burroughs Class 16Zuse-1

ASCC (Mark 1)

IBM 650IBM 1620

Colossus

ENIACUNIVAC I

Burroughs 5000IBM 7040

IBM 350/75SDS 920DG NovaDEC-KL-10DEC VAX 11/780

VAX 11/750

Sun-3

IBM PS/290

AT&T Globalyst 600

Power Tower 150e

IBM 704Whirlwind

IBM 7090IBM 1130

DEC PDP-10CDC 7600

DG EclipseApple II

Sun-2

IBM PCCommodore

64

Macintosh-128K Mac II

Gateway-485DX2/55

PowerMac 8100/80Gateway G6-200

2040

150 000 DM

1973 1977 1981 1984 1987 1991 1995

10 000 DM

800 DM

240 DM

10 DM

60 DM

1 DM

1999 2005 2009 20172013

3 Cent1 Cent

O,5 Cent 0,1 Cent

26 Pfennig

History Forecast

1 gu

mm

i bea

r

1 sh

eet o

f pap

er

1 po

st it

1 pa

perc

lip

Prices of 1 Mbit DRAM

Expensive functions and applications today will be cheap tomorrow.

Source: acc. to Weick, Manfred, ZT IK MK

2002

5 Cent

1 ch

ewin

g gu

m

B. Photonic technologies

Fiber optic cables for long-haul networks – beginning of 70-th

Main directions of FOC development:

• The transition from multimode to single mode fiber

• Wavelength changing of the applied spectral windows with =0,85 mkm to =1,33/1,55 mkm

• The decrease of attenuation in the fiber from figures of several dozens of dB/km to 0,2 dB/km

Photonic technologies (Cntd)

# Main requirements – grows of network capacity

# Boom growth of traffic, especially data

# Number of factors:• Accelerated development of the Internet• Commercial applications of graphic and video information exchange • The growth of worldwide business, which leads to the growth of worldwide traffic

# New technologies for photonic networks

SDHD/WDM

Tbits/s

Performance improvements in photonics

Year1975 1985 1995 2005 2015

+70 % p.a.

40´10 G

Theoretical limit of glass fiber

102

104

106

108

1010

16´2.5 G10 G

2.5 G

565 M

140 M34 M

Experiment:7 Tbit/s, 50 km

Product160x10G; 80 km

+100 % p.a.

Fiber CapacityMbit/s*km

Sou

rce:

ICN

M T

A: P

hoto

nics

2.3. Mega trends on ICT

- Digitalization - Mobile communications - Internet - Convergence of services/networks/devices - Main shifts on ICT

Telephony IP Apps

Circuit based

Packet based

TODAY TOMORROW

Mobile

Wireline

Connectionless

Connections

Mobile Packet based Connectionless

IP AppsTelephony

ConnectionsCircuit based Wireline

•Analog Digital Fixed Mobile Voice Data

CONVERGENCE

Main shifts on ICT

Grows of subscribers

2002: Fixed = Mobile 1,15 Billion

Grows: Fixed –2%, Mobile – 10% (ITU)

A. Digitalization

Digitalization of:

• Information

• Information processing tools

• Transportation systems

Transition from analog to digital format

• Analog networks - separate

• Integrated networks - digital

• Convergence in ICT

B. Mobile communications

Grows of fixed and mobile and distribution by technology

Grows of fixed and mobile subscribers

Ovum

Limitations of 2G systems

Evolution of mobile communications

Brief History of the Internet•1957– Launch of Sputnik is impetus for U.S. to form ARPA (DoD)•1965 – ARPA sponsors a study “Cooperative network for time-sharing”; Innovation of packet switching (D. Devis, UK, P. Baran, US)• 1969 – September 2, launch of first computer network ARPANET • 1972 – Beginning of E-mail (Tomlinson, US)• 1974 – First article about TCP/IP (Cerf/Kahn)•1979 – Establishing first research computer network (NSF, Univ. Wisc., DARPA)

C. Internet

Brief History of the Internet (Cntd) •1982 – Internet defined as TCP/IP-connected network•1986 – 56 kb/s NSFNET created for 5 supercomputing centers• 1989 – Number of Internet nodes breaks 100 000; IETF comes into existence• 1992 – WWW released; Number of nodes breaks 1M• 1995 – Internet Society was founded VoIP comes to the market

• 2001 – Number of hosts breaks 300M

• 2002 – VoIP has taken away 13% of long-haul telephone traffic

The Internet timeline

1965 1970 1975 1980 1985 1990 1995 2000 2005

Military/Academic AppsCommercial

Apps

Number of hostsNumber of users

Reasons for grows:•Windows•Modems•Searching tools•HTL

Internet grows without any signs of recession

Forecast of the global voice/data traffic’s growth

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

1

2

3

4

5

6

Total telephone traffic International telephone traffic Data traffic

Tbps

Source: Arthur D. Little, 1999

24

20.1

0

5

10

15

20

25

FixedData

Fixedtelephony

Mobile

Tra

ffic V

olu

me (

Tb

ps)

European carriers’ revenues

Source: IDATE, Mar 2000

2004, Total USD $295 billion

Fixed Data10%

European carrier’s traffic

Other13%

Fixed telephony39%

Mobile services

38%

Source: Blended from IDC, ECTA, & Operators

Where traffic comes from in 2004

Today´s realities

Fixed Data Services Comprise a Smaller Proportion of Income

but Represent the Largest Proportion of Traffic

Total U.S. Internet traffic

1970 1975 1980 1985 1990 1995 2000 2005 2010

Voice Crossover: August 2000

4/Year

2.8/Year

1Gbps

1Tbps

10Tbps

100Gbps

10Gbps

100Tbps

100Mbps

1Kbps

1Mbps

10Mbps

100Kbps

10Kbps

100 bps

1 Pbps

100 Pbps

10 Pbps

10 bps10 bps

ARPA & NSF Data to 1996

New Measurements

Projected at 4/Year

Source: Roberts et al., 2001

Some issues of Internet traffic

• Most traffic is from corporations (80% estimated)– Main growth is from corporations

– “Last mile” has been improving rapidly (100–1000 Mbps)

– Corporate traffic is anti-recessionary

• Move from private networks to Internet for cost reduction (VPN)

- Corporate Internet use hit critical mass in 2000

•Now need to use the Internet for all business

•Inter-corporate traffic is now mainly over the Internet

•Intra-corporate traffic is growing in size (E-mail documents)

- Personal traffic is growing but broadband deployment is slow

- Internationally, traffic is still at the pre-2000 growth rate of 2.8/year

Some issues of Internet traffic (Cntd)

Time to reach 50 mio customers

120

100

80

60

40

20

01922 1950 1980 1995

RadioRadio(40 (40 Years)Years)

TVTV(15 (15 Years)Years)

CableCable(10 (10 Years)Years) ComputerComputer

InternetInternet(<5 (<5 Years)Years)

Mobile PhoneMobile Phone

TelephoneTelephone(90 Years)(90 Years)

mil

lio

ns

of

cu

sto

me

rs

Products have an accelerated market penetration.

Penetration rates of services (US market)

NapsterNapster18 months18 months

Penetration (in %%) of different technologies and devices

Mobilepenetration

Internet penetration

PC penetration

Broadband Penetration

USA

Europe

Asia

36 50-60 40 5-10

20 40 70 << 5

17 <5 <30 <<<5

Source: Cisco, 2002

Mobile vs. fixed Internet penetration in Europe

Source: Siemens

Mobile and Internet penetration in Western European countries (YE 2000)

(Fixed) Internet penetration (in %)

Mo

bile

pen

etra

tio

n (

in %

)

0% 10% 20% 30% 40%

CH

FIN

SWE

GRE

POR

ITA AUTNOR

LUXNLSPA

IRL

FRA

BEL

GER

UK DK

50%

50%

60%

70%

80%

40%

D. Convergence of networks/services/devices

United Network

Telephony IP Apps

Circuit based

Packet based

TODAY TOMORROW

Mobile

Wireline

Connectionless

Connections

Mobile Packet based Connectionless

IP AppsTelephony

ConnectionsCircuit based Wireline

•Analog Digital Fixed Mobile Voice Data

CONVERGENCE

Main shifts on ICT

Main shifts on ICT (Cntd)

Telephones, PCs, TVs

Flat networks with distance-independent tariffs

Voice/data on networksData, then MM dominates on networks

Proprietary and specialized networking

Totally open and interoperable networks

Global network of networks

Dedicated applications

High tariffs for long-distance service

TODAY TOMMOROW

Multifunctional devices with network interfaces

Apps designed for universal and independent using

PSTN and Internet are separated

# Market downturn in 2001 - Manufacturers‘ sales

CSFB

-15%

-25%DeutscheBank and

2.4. Crisis in IC sectorA. Manufacturers

Revenue Manufacturers in 2000 and 2001

Turnover (Billion Euro)

2000 2001

40

35

30

25

20

15

10

5

0

Siemens I and CNokia

AlcatelEricsson

Nortel

LucentCisco

Change comparedto previous year

+ 8%+ 3%

- 19%- 15%

- 42%

- 22%- 24%

Marconi - 12%

0

5

10

15

20

25

30

35

40

Source: CD S C

Manufacturers EBITA in 2000 and 2001

EBITA (Billion Euro)

Nokia

Alcatel

Ericsson

Nortel

Lucent

Cisco

Marconi

Siemens I and C

-30

-25

-20

-15

-10

-5

0

5

-20

-25

-30

-15

-10

- 5

0

5

2000 2001

1st tier

2nd tier

3rd tier

Market downturn in 2001 - Carrier spending

CSFB

-15%

-25%

- 6%

- 23%

16%

Source: JPMorganNote: Source for 2001-2003 capex spending estimates is JPMorgan

Carrier Spending, Actual Versus Normalized

0.01995 1996 1997 1998 1999 2000 2001E 2002E 2003E

20.0

40.0

60.0

80.0

100.0

120.0

$ Billion

CapEx, Top 15 Carriers

Normalized Spending

B. Operators

Excessive growth slowed and dropped in following three areas:

• Internet • E-business• Mobile phone euphoria

• The Internet boom hadn’t to pass the reality checking • E-business didn’t gain speed as quickly as anticipated.

• The mobile phone euphoria came to naught

540560 570

550

500

430

290 290 280260

250 240 240220

190

20 23 25 30 30 28 22

346

160

280260

170 250

0

100

200

300

400

500

600

1999 2000 2001 2002 2003 2004 2005

Op

era

tors

‘ net

de

bt

Year

$bn

Source: GS II/01

Total

Europe

USA

Asia Pacific

Operators’ debts increase and reduce free cash flow

Projection

C. Basis for huge losses - manias

Growth-mania

Acquisition-mania

1. Growth maniaOver a number of years, growth was the exclusive criterion for measuring success in the so-called New-Economy.

2. Acquisition maniaCompanies in particular paid outrageously overvalued prices for acquisitions. This resulted in wildly overvalued companies and share prices.

dot.com-mania

Financing-mania

3. Dot.com maniaTill March 2000 we have seen a wholly irrational run-up in share prices, particularly for I and C start-ups. The successful guideline was: “Earn revenues from banners and from clicks.”

4. Financing maniaThe fourth major factor was that growth wasn’t earned, but bought. Many companies delivered products and systems to customers according to the motto “volume is everything” - without reasonably checking if they were viable or credible.

Basis for huge losses – manias(Cntd)

Global MM-MSnetwork

Global MM-MSnetwork

After 2010 all information will be digitally stored and sent via the global network.

Concluding remarks